May 29 -Dear Mr. President, About the deterioration of customer service on major airlines

President
Donald J. Trump

The
White House

1600
Pennsylvania Ave, NW

Washington,
DC 20500

Dear
Mr. President,

Happy
Memorial Day! I trust that you had a comfortable plane ride home from Europe
this weekend and that the care and respect shown to you
was what you expected and deserved. As you caught up on the news you may have
noticed several media outlets ran stories about the deterioration of customer service
on major US network carriers, namely Delta Air Lines, American Airlines and
United Airlines (Big Three).

One
theme common to those recent news articles and op-eds was that consumers are
apparently so price conscious that airlines are forced to respond with cramped
seating, poor service, cheap snacks, evermore ancillary fees and outsourced,
poorly paid service workers. Some writers go so far as to imply that miserly consumers
are responsible for the violence toward Dr. Dao on that now infamous United
Airlines flight. Mr. President, what a
canard!

An
obvious problem with that fallacious logic is that many of those same
price-conscious consumers seek out the very lowest prices at, for example,
Costco and are treated very, very well. Of course, Costco has two structural
incentives that airlines do not have and their customers do not benefit from.

First, when
consumers are in the market for bulk goods, Costco can fulfill virtually 100%
of their needs. However, BJ’s, Wal-Mart and many others can also fulfill those
same needs. So, if Costco mistreats a consumer he has the opportunity to take
advantage of near perfect competition and go to BJ’s. That’s a powerful
incentive for Costco to take very good care of its customers.

In
contrast, no airline can meet 100% of a typical consumer’s air travel needs.
This was always the case but has become more acute after massive US airline
industry consolidation. According to the U.S. Travel Association, 74 U.S.
airports are completely monopolized by just one airline that carries all of the
flights in and out. And in 155 airports, one of the "big four" [Big
Three and Southwest Airlines] airlines controls over 50 percent of seat
capacity.

Those
same four airlines control over 80% of total domestic seat capacity, down from
eleven airlines a decade ago. Likewise, the Big Three, along with their
antitrust immunized foreign joint venture partners, control more that 80% of
the lucrative transatlantic market. At this point, large portions of the Big
Three’s customer bases are captive without true competitive choice and airlines
do not have the potent incentive that Costco has to take good care of its
customers.

Second,
if Costco breaks consumer protection statutes, or otherwise implements unfair
and deceptive practices, consumers can sue them, their state attorneys general
can sue them and Costco can face class action lawsuits. This is a powerful
incentive to avoid trampling on consumers’ rights and interests.

Such
a private right of action no longer exists in commercial aviation, and thus, airlines
have extremely little incentive to discipline their policies and practices so
that consumers are thus protected. There is no effective substitute for a
private right of action. For example, in 2014 US airlines had $169 billion in revenues
and civil penalties
assessed by the US DOT of $2.7 MILLION for unfair and deceptive practices and
unfair methods of competition. There is no incentive there, just a very slight
slap on the wrist.

Sadly,
the issue of imperfect competition represents an operating and strategic
advantage that the major US network carriers are fighting to maintain. For evidence
of a strategy of seeking to maintain their monopoly positions, one only has to
look at the ongoing scorched-earth war against the Gulf carriers, or the battle
to keep Norwegian Air International grounded.

Imperfect
competition and no private right of action have combined to produce a failing
market for commercial air transportation services. The vast majority of current
legislative proposals, drafted in or outside of Congress, deal with problems
that emanate from these two causes.

Below
are 10 examples (among numerous others) of probable violations of 49 U.S.C.
41712 often occurring in the marketplace that result in injury to consumers
from unfair or deceptive practices or unfair methods of competition.

When
an airline:

1.
fails to disclose the all-in price of travel before a consumer is locked into
the purchase, e.g., a failure to tell a consumer that there is a baggage or
seat assignment fee;

2.
flouts the express admonitions of DOT by renaming its fuel surcharge as a
“carrier imposed charge" circumventing DOT’s “Additional Guidance on
Airfare/Air Tour Price Advertisements” of February 21, 2012 that requires
airlines to tie fuel surcharges to actual cost;

3.
imposes a $400 fuel surcharge or carrier-imposed charge when a consumer redeems
miles for a trip even though the price of oil has fallen 70 percent since June
of 2014, and even though DOT considers airline loyalty points as a discount for
future travel in return for a consumer’s repeat business;

4.
fails to make available frequent flier seats sufficient to meet demand;

6.
charges $200 - 6 to 7 times the cost of handling a ticket change – when the
cost to airlines for customer contact with a call center to change a
reservation ranges from $25 to $35 dollars;

7.
mishandles the carriage of a pet leading to injury or death;

8.
fails to deliver a service at a level that a consumer would reasonably expect
such as (a) when an airline damages or loses a customer’s baggage and the
airline fails to make a refund or there is an excessive delay of the refund,
(b) when a customer cancels a flight and the airline fails to make a refund or
there is an excessive delay of the refund and (c) when an airline pursues a
practice of a high percentage of over-sales and involuntary bumpings;

9.
fails, prior to a consumer’s purchase, to disclose that the flight being booked
is on the DOT’s list of chronically late flights and is thus a highly defective
product; and

10.
refuses at small to medium-size airports to allow competitors access to leased
gates on customary terms, maintaining its dominant market position by blocking
new entrant competition.

When
eleven airlines shared 80% of domestic seat capacity, this situation was unfair
but tolerable. After industry consolidation, it has become unbearable and has
reached a tipping point with consumers. In truly competitive markets, with
customary consumer legal protections, rarely do these kinds of problems surface.
When they do, justice for consumers is usually swift. In commercial aviation,
the problems are now so systemic and institutionalized that there is near zero
justice.

This
month during airline passenger-mistreatment hearings in Congress, American
Airlines was sufficiently tone deaf to splash all over the news its decision to
reduce seat pitch to 29 inches in some rows. Mr. President a tall person like
yourself, in a brace-for-impact position in a row with a 29-inch pitch, could
be paralyzed from a head strike to the seatback in front of him. And in seeming
support for American Airline’s decision, United Airline’s President told
employees that customers voted with their wallets and the reduced seat pitch is
what they wanted, supposedly along with associated health and safety risks. The
Big Three are able to reduce seat pitch only because they are in lockstep with
one another and consumers are powerless.

Mr.
President, with your support this summer, during the Federal Aviation
Administration reauthorization process, Republican and Democratic Members of
Congress have an opportunity to at least give consumers a fighting chance in a
much too heavily concentrated industry by restoring a private right of action
in a bill readied for your signature. In return, Members of Congress, upon returning
home this fall, will be able to point to an important accomplishment, enabled
by your bipartisan leadership, to help consumers in an important national
industry.